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Why One Cancer Company Has Raised $300 Million In 12 Months Without An IPO

Juno Therapeutics, already one of the best-funded startups in biotechnology history, just announced that it has raised $134 million in a private placement, meaning it has raised $300 million in less than 12 months.

How impressive is that figure? It’s more than some of its rivals have raised in initial public offerings, and may well set a record for pre-IPO financing.

“While we’re truly flattered by the interest that comes with [this financing], what’s truly flattering is it’s about the execution of our strategy,” says Juno chief executive Hans Bishop. “We believe the winner in this space is going to be about doing great science and to do that you have to be well-resourced.”

Why’s Juno, based in Seattle, raising all this money? It’s competing to in a race to commercialize one of the most exciting – and daring – new technologies to hit cancer in years: genetically re-engineering patients own white blood cells to hunt down the tumor and kill it. These cells are known as chimeric antigen receptor T-cells, or CARTs.

It’s an increasingly crowded field. Kite Pharma, based in Santa Monica, raised $128 million in an IPO in June; it’s using CARTs licensed from the National Cancer Institute. Pfizer recently paid $110 million in milestones and investments – plus up to $2.9 billion in milestone payments – to work with CART-developed Cellectis. And Novartis seems to be leading the pack to market, rushing to commercialize CART cells developed to treat acute lymphoblastic leukemia in both adults and children.

Juno seems ahead of most – though not Novartis – but is taking a unique approach to developing this new technology. Because it was formed not by a single academic group developing CARTs but through the combined efforts of researchers from Memorial Sloan Kettering in New York, the Fred Hutchinson Cancer Research Center in Seattle, and others, it has the option of working on multiple approaches to CARTs and putting them into a sort of scientific melting pot, hopefully creating a better product in the end.

The company is currently highlighting three different CARTs it is developing, all targeted against a protein called CD19 that is present on the B-cells that go haywire in many blood cancers.

JCAR015: This CART is being developed in adult ALL, and was principally developed by Michel Sadelain and Renier Brentjens of Memorial Sloan Kettering, both Juno cofounders. This study has been furthest along of the Juno trials, and was subject to a brief clinical halt when some patients died while on the therapy earlier this year.

JCAR014 and JCAR017: These CARTs were developed at the Fred Hutchinson Cancer Research Center. Most CARTs are made by making genetic modifications to a large, unselected group of a patient’s white blood cells. These CARTs select for CD8 cells and CD4 cells, allowing a lower dose and, potentially, fewer side effects – which can include dangerously high fevers and scary immune responses that can result in patients dying. Two other Juno cofounders, Stan Riddell of the “Hutch” and Michael Jensen of Seattle Children’s, have been pioneers in this approach.

One big open question in the field relates to intellectual property. Juno and Novartis are embroiled in a legal battle over who has rights to what. It’s not unlikely that licensing fees will be paid, one way or the other. I asked Bishop if he foresaw either the first or the best CART being kept from patients by legal wrangling.

“I really don’t think that will happen,” Bishop says. “That’s a personal view, but I’m not worried about that.”

“The way we look at it is the unmet need for these patients is very, very real, the prognosis for patients battling ALL after they’ve failed their second round of consolidation is very dire,” Bishop says. “If competition really accelerates the chances for a better standard of care for those patients, it’s a good thing.”

As to who is investing the new $134 million – well, Bishop can’t say. Major prior investors participated, as did some ten public mutual funds and healthcare-focused funds that wish to remain anonymous. Bishop says only that they have “an outstanding history of building companies,” include both generalist and specialist funds, and are based in places including New York, Boston, and San Francisco. He declined to say what he is thinking about an IPO.

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